Government Programs Fraud

January 8, 2021

Ducci Electrical Contractors, Inc. has agreed to pay more than $3.2 million to resolve criminal and civil charges alleging fraud on two public construction contracts in Connecticut that were largely funded by the U.S. Department of Transportation’s Disadvantaged Business Enterprise (DBE) program.  The two contracts—one from 2007 that was valued at over $79 million, and the other from 2012 that was valued at nearly $7 million—Ducci indicated that it would subcontract with a particular DBE at 13% and 12% respectively.  However, in violation of the terms of the program, Ducci controlled most of the decisions made by the DBE, preventing the DBE from performing a commercially useful function on either contract, and falsely submitted to the government that the DBE had performed the work.  USAO CT

November 4, 2020

T-Mobile will pay a $200 million penalty to resolve allegations that Sprint, prior to its merger with T-Mobile, falsely claimed monthly Lifeline subsidies for hundreds of thousands of low-income consumers who were not in fact using services.  FCC rules require that telecommunications providers claiming Lifeline subsidies must de-enroll subscribers who don't used their service at least once a month, so that the government does not continue to pay for unused Lifeline services.  FCC

November 3, 2020

Illinois-based charter school management company Concept Schools, NFP, will pay $4.5 million to settle allegations that it violated the False Claims Act by rigging the bidding process for E-Rate contracts with its network of charter schools between 2009 and 2012 so that its preferred technology vendors received contract awards, despite the fact that they provided equipment at higher prices than those approved by the FCC for equipment with the same functionality.  DOJ

October 27, 2020

In what appears to be one of the largest Post-9/11 G.I. Bill fraud cases ever prosecuted in the country, the owner of a technical training school in San Diego has been sentenced to over three years in prison and ordered to pay almost $30 million in restitution for defrauding the VA out of almost $30 million.  To conceal the fact that Blue Star Learning had close to 100% veteran students—which violated the VA’s “85/15 Rule” that required 85% non-veteran students per course—and to conceal the fact that most of the school’s graduates did not obtain jobs in the fields they were trained in, owner Nimesh Shah allegedly created and submitted elaborate student and graduate files to the California State Approving Agency for Veterans Education (CSAAVE) and the VA.  Because he knew the fake students and employers could be contacted by the agencies, Shah went so far as to have an employee buy 30 mobile phones outfitted with fake company voicemails, as well as hire overseas individuals to man fake email addresses that he created.  As a result of the fraud scheme, Blue Star Learning was paid over $11 million in tuition and over $18 million in housing allowances and stipends.  USAO SDCA